Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.26.1
Income Taxes
 12 Months Ended
Jan. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The domestic and foreign components of the income before provision (benefit) for income taxes was as follows:
Year Ended January 31,
(in thousands) 2026 2025 2024
Domestic $ 30,921  $ 18,464  $ 32,033 
Foreign 35,868  29,828  28,489 
Total $ 66,789  $ 48,292  $ 60,522 
The provision (benefit) for income taxes consisted of the following:
Year Ended January 31,
(in thousands) 2026 2025 2024
Current tax provision:
State $ 328  $ 1,834  $ 207 
Foreign 23,325  12,875  11,788
Total current tax provision
 23,653  14,709  11,995 
Deferred tax provision (benefit):
Federal 17,522  (69,072) 94 
State 3,290  (17,795) 108 
Foreign (581) (1,159) (3,078)
Total deferred tax provision (benefit) 20,231  (88,026) (2,876)
Total provision (benefit) for income taxes $ 43,884  $ (73,317) $ 9,119 
After adoption of ASU 2023-09, a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate (“ETR”) for the year ended January 31, 2026 was as follows:
(in thousands) Income Tax Provision ETR
U.S. federal statutory rate $ 14,026  21.0  %
U.S. state and local income taxes, net of U.S. federal income tax effect(1)
3,464 5.2 
Foreign tax effects
India
Changes in methods of accounting 889 1.3 
Withholding taxes 810 1.2 
Statutory income tax rate differential 722 1.1 
Kingdom of Saudi Arabia - withholding taxes 1,936 2.9 
Brazil - withholding taxes 1,725 2.6 
Other foreign jurisdictions 1,125 1.7 
Effect of cross-border tax laws - impact of disregarded entity elections 3,627 5.4 
Nontaxable and nondeductible items
Excess tax deficiencies on share-based compensation 5,056 7.6 
Non-deductible officer’s compensation 2,696 4.0 
Other 836 1.3 
Changes in unrecognized tax benefits 6,972 10.4 
Total $ 43,884  65.7  %
(1) The four largest state and local jurisdictions consist of California, New York, New York City and Illinois.
Before the adoption of ASU 2023-09, a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate was as follows:
Year Ended January 31,
2025 2024
U.S. federal statutory rate 21.0  % 21.0  %
Effect of:
U.S. state taxes, net of U.S. federal benefit 2.6  2.4 
Foreign taxes in excess of the U.S. rate differential 1.4  1.6 
Foreign withholding taxes 6.3  6.1 
Non-deductible expenses 4.2  0.3 
Non-deductible officer's compensation 7.9  16.3 
Changes in valuation allowance (199.5) (31.3)
Excess tax benefits related to share-based compensation (4.1) (3.6)
Global Intangible Low Taxed Income (GILTI) inclusion —  0.3 
Impact of disregarded entity elections 7.0  — 
Other 1.4  2.0 
Effective tax rate (151.8) % 15.1  %
A reconciliation of the income taxes paid by the Company for the year ended January 31, 2026 were as follows:
(in thousands)
U.S. state and local $ 3,868 
Foreign
Brazil 7,888
India 5,410
Kingdom of Saudi Arabia 2,450
Other 5,164
Total $ 24,780 
Deferred Tax Assets and Liabilities
The components of deferred tax assets and liabilities were as follows:
January 31,
(in thousands) 2026 2025
Deferred tax assets:
Net operating loss carryforward $ 82,268  $ 90,177 
Accrued compensation 1,905  6,911 
Accrued commissions 3,268  4,847 
Fixed assets and intangible assets 5,714  3,486 
Allowance for credit losses 1,959  2,137 
Deferred revenue 3,203  2,012 
Stock-based compensation 9,453  8,800 
Operating lease liabilities 10,941  11,719 
Other 4,336  8,751 
Total deferred tax assets 123,047  138,840 
Less valuation allowance —  (705)
Deferred tax assets, net of valuation allowance 123,047  138,135 
Deferred tax liabilities
Capitalized commission costs (41,589) (34,834)
Operating lease ROU asset (9,979) (10,638)
Other (1,147) (2,329)
Total deferred tax liabilities (52,715) (47,801)
Net deferred tax assets(1)
$ 70,332  $ 90,334 
(1) Deferred tax liabilities of $0.1 million and nil are recorded within other liabilities, non-current on the consolidated balance sheets as of January 31, 2026 and 2025, respectively.
At January 31, 2026, for U.S. federal income tax purposes, the Company had net operating loss (“NOL”) carryforwards of approximately $308.1 million, which expire in fiscal years 2036 through 2038. The U.S. federal NOLs generated after fiscal year 2019 do not expire and may be carried forward indefinitely. For U.S. states income tax purposes, the Company had NOL carryforwards of approximately $248.0 million, which expire in various years beginning from fiscal years 2027 through 2042. Beginning on January 31, 2025, based on the relevant weight of positive and negative evidence, including the amount of the Company’s taxable income in recent years, which is objective and verifiable, and consideration of its expected future taxable earnings, the Company recognizes deferred tax assets without an offsetting valuation allowance for these federal and state NOLs. For foreign income tax purposes, the Company had NOL carryforwards of approximately $5.4 million, which expire beginning in fiscal year 2034.
Utilization of the Company’s NOL carryforwards may be subject to an annual limitation as a result of an ownership change, as defined under the provisions of Section 382 of the Code and similar state provisions. Such an annual limitation could result in the expiration of
the NOL carryforwards before utilization. Analysis has been conducted to determine whether an ownership change had occurred since inception. This analysis has indicated that although ownership changes have occurred in a prior year, the NOL would not expire before utilization as a result of the ownership change. In the event that the Company has subsequent changes in ownership, NOLs and research and development credit carryovers could be limited and may expire unutilized as a result of the subsequent ownership change. Utilization of foreign NOL carryforwards in the future will be dependent upon the local tax law and regulation.
The Company had a valuation allowance of nil and $0.7 million as of January 31, 2026 and 2025, respectively. The Company monitors the realizability of its deferred tax assets taking into account all relevant factors at each reporting period. As of January 31, 2025, based on the relevant weight of positive and negative evidence, including cumulative taxable income over the past three years, which is objective and verifiable, and consideration of its expected future taxable earnings, the Company concluded that it is more likely than not that its U.S. federal and state deferred tax assets are realizable.
The Company has not recorded deferred income taxes and withholding taxes with respect to the undistributed earnings of its foreign subsidiaries, as such earnings are determined to be reinvested indefinitely. If those earnings were repatriated, in the form of dividends or otherwise, the Company could be subject to U.S. income taxes and withholding taxes to the various foreign countries. As of January 31, 2026, the Company had $85.4 million of earnings indefinitely reinvested outside of the U.S. Due to complexities in the laws of the foreign jurisdictions and the assumptions that would have to be made, it is not practicable to estimate the amount of tax associated with such unremitted earnings.
The IRA was signed into law on August 16, 2022. The bill was meant to address the high inflation rate in the U.S. through various climate, energy, healthcare and other incentives. These incentives are meant to be paid for by the tax provisions included in the IRA, such as a 15 percent corporate minimum tax, an excise tax on stock buybacks, additional Internal Revenue Service funding to improve taxpayer compliance, and other items. During the year ended January 31, 2026, the Company paid $1.9 million in excise taxes associated with the 2024 Share Repurchase Program. As of January 31, 2026, the Company has accrued $0.8 million of excise taxes associated with the 2025 Share Repurchase Program.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law in the United States. The OBBBA includes significant changes, such as the permanent extension of certain provisions that were originally enacted in the 2017 Tax Cuts and Jobs Act and were set to expire on December 31, 2025, modifications to certain international tax provisions and the restoration of tax treatment for certain business provisions, including 100% bonus depreciation for certain qualified property, domestic research and experimental cost expensing and the business interest expense limitation. The new legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. After assessing the impact of the OBBBA, the Company concluded that it did not have a material impact on the Company’s consolidated financial statements, as well as its annual estimated effective tax rate.
Unrecognized Tax Benefits and Other Considerations
The Company records liabilities related to its uncertain tax positions. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement with the taxing authority. The Company records interest and penalties related to unrecognized tax benefits within the Company’s provision for income taxes.
A reconciliation of the beginning and ending balance of total gross unrecognized tax benefits for the year ended January 31, 2026:
Year Ended January 31,
(in thousands) 2026 2025 2024
Balance, beginning of period $ 3,102  $ 2,436  $ 1,728 
Tax positions taken during a prior year:
Gross increases 4,848  —  — 
Gross decreases (4,848) —  — 
Tax positions taken during the current year:
Gross increases 2,013  666  708 
Balance, end of period $ 5,115  $ 3,102  $ 2,436 
As of January 31, 2026 and 2025, the Company had recorded unrecognized tax benefits of $5.1 million and $3.1 million, respectively, that, if recognized, would benefit the Company’s effective tax rate.
During the year ended January 31, 2026, the Company made a one-time payment of $4.8 million to settle a prior period income tax matter with a foreign tax authority. The payment, which included interest and penalties of $1.7 million, was reflected as an expense in fiscal year 2026. No further amounts are expected to be due in connection with this matter.
The Company’s India subsidiary is currently under audit by India tax authorities for tax years 2016 through 2018. Related to the audit by the India tax authorities, it is reasonably possible that the Company’s uncertain tax positions could change within the next 12 months. An estimate of the range of any change cannot be made. The Company believes that it has recorded all appropriate provisions for all jurisdictions and open years. However, the Company can give no assurance that taxing authorities will not propose adjustments that would increase its tax liabilities.
The Company is not currently under audit by any other taxing authority in any other material jurisdiction.
Because of NOL carryforwards, all of the Company’s tax years dating back to inception in 2012 remain open to tax examination in U.S. and certain state tax jurisdictions. For India, tax years from 2016 remain open. For other major non-U.S. jurisdictions, tax years from 2019 to present remain open to tax examination.